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Wall Street deepens stocks slump; dollar, U.S. yields ease

By Michael Connor

NEW YORK (Reuters) - Global equities markets dropped for a fourth day on Friday, with Wall Street again slumping as investors shrugged off economic data showing solid improvement in U.S. labor markets.

U.S. Treasury debt prices rose, while the dollar moved lower.

U.S. stock trading was dogged by worries about Argentina's debt problems. A U.S. judge criticized Argentina's decision to default earlier this week and ordered talks between the country and holdout investors to continue.

Confusion over Federal Reserve policy and ongoing tensions in Ukraine and Gaza were also blamed for the U.S. stocks drop.

Stock indices in New York had lost 2 percent on Thursday and posted sharp losses again on Friday before trimming them somewhat in late trading.

The Dow Jones industrial average <.DJI> fell 69.93 points or 0.42 percent, to 16,493.37, the S&P 500 <.SPX> lost 5.52 points or 0.29 percent, to 1,925.15 and the Nasdaq Composite <.IXIC> dropped 17.13 points or 0.39 percent, to 4,352.64.

For the week, the Dow was down 2.8 percent and the Nasdaq was down 2.2 percent. The S&P lost 2.7 percent, its biggest weekly decline since the week ending June 1, 2012.

Wall Street's losses may not be finished, according to Nick Sargen, chief economist at Fort Washington Investment Advisors in Cincinnati.

"We're still not cheap by any means, and this could be the start of the 10 percent correction that's been long overdue," he said.

Friday's U.S. downturn extended a global decline, which began on Thursday with Wall Street's sell-off. The MSCI All-Country World index <.MIWD00000PUS>, which has been off nearly all week, was down 0.55 percent at 420.70 late on Friday.

Japan's Nikkei index <.N225> dropped to a one-week low and European shares <.FTEU3> were off 1.23 percent.

U.S. Treasury yields eased on publication of July's U.S. employment data, which included a sixth straight month of over 200,000 job additions in the world's biggest economy and soft hourly wage increases.

Benchmark 10-year notes were last up 15/32 in price to yield 2.51 percent, down from 2.58 percent before the jobs data was released."It's a Goldilocks report for an economy that is steadily expanding but not lifting off. It will reinforce for now the Federal Reserve's commitment to a gradualist policy approach," said Mohamed El-Erian, chief economic adviser at Allianz in Newport Beach, California.

The dollar, which has been climbing on hopes U.S. rates would rise sooner rather than later, moved lower. Analysts noted the jobs data showed no uptick in hourly wages, an indicator said to be of central importance to Fed Chair Janet Yellen.

The U.S dollar index <.DXY>, which measures the greenback versus six major currencies, had traded near 10-month highs but was down 0.17 percent at 81.32.

"The dollar may have become a bit overly stretched," said Joe Manimbo, senior market analyst at Western Union Business Solutions in Washington. "We are going to have to see some wage growth to help justify these elevated levels for the greenback."

Gold rose nearly 1 percent, snapping a four-day losing streak, as the payrolls data dampened talk of early rate rises and polished bullion's appeal as a hedge. Spot gold prices finished up 0.9 percent at $1.293.01 an ounce.

Brent crude oil fell more than $1 to hit a two-week low, slipping below $105 a barrel in its third straight day of losses as oversupply in the Atlantic basin and low demand outweighed worries over political tensions in the Middle East, North Africa and Ukraine. Brent crude traded at a low of $104.41. U.S. crude futures fell 64 cents to $97.54 a barrel.

(Reporting by Michael Connor in New York; Additional Reporting by Ryan Vlastelica in New York, Blaise Robinson in Paris, and Sudip Kar-Gupta in London; Editing by Dan Grebler)

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